Despite the lower spending levels at most companies and tough ecomomic climate, companies realize the benefit of investing in a transportation solution can reduce costs.  According to a recent Aberdeen survey, nearly 70 percent of companies for the firm’s second quarter 2009 AXIS report on TMS say that they currently have a mandate from management to make technology recommendations for transportation-related solutions with 54 percent of respondents planning to adopt a related solution in the next 18 to 24 months.

AMR Research also has a new report that discusses the robust TMS savings that firms that invest in a transportation solution are receiving.  According to AMR, TMS solutions offer considerable savings potential including "freight budget cost reduction, route and mode optimization, more competitive delivery options, and reduced network inventory levels".

Given the cost pressure that organizations have been under recently, the adoption of Transportation Management System (TMS) software has been strong.

The number of companies that are utilizing a TMS has risen from 28% two years ago to 38% today. It is remarkable that still only 38% of companies have a commercial TMS package which shows that there plenty of growth potential for the software vendors.  The volatility of fuel prices and the desire to reduce costs has spurred investment in TMS solutions which can reduce freight costs from 5%-30%.

http://www.scdigest.com/assets/On_Target/09-06-30-3.php

 In the latest SCDigest, they compiled a list of ten signs that may indicate your global sourcing strategy needs a tune-up including:

• Many of the nominal savings on a per unit basis from global sourcing are, in reality, lost when true overall logistics and supply chain costs are accurately considered.
• Decreases per unit costs come at the price of substantial increases in inventory, as inventory buffers and inventory obsolescence increase significantly as a result of the longer and more uncertain lead times.
• Expediting charges to get goods from overseas in time to meet production and distribution requirements increase substantially.
• Sales opportunities are lost due to failure of offshore goods to arrive on time.
• A company consistently misses budgeted financials due to a mismatch between expected total landed costs and actual costs.
• Most global sourcing process and handle manually, with minimal technology support, and staff has an increasingly difficult time keeping up.

Here are a few of the signs that a company needs to re-assess its approach to global sourcing and bring in some outside help.  Read the entire list at SCDigest:

  http://www.scdigest.com/assets/On_Target/09-06-23-2.php

A new report from Aberdeen Group shows that given the current economic climate, 91% of companies are actively seeking ways to improve their inventory performance through process change.  The study also showed that 62% of companies reported a drop in customer demand over the past year which has resulted in the new focus on inventory to avoid write-offs and improve working capital. 

The report also shows that the use of information technology is critical in improving inventory with 61% of respondents making inventory-related technology recommendations within the past six months.  Best-in-Class companies are more likely to use technology for improving inventory replenishment, demand analysis, inventory segmentation and inventory optimization. 

http://www.aberdeen.com/summary/report/benchmark/5965-RA-inventory-management-capital.asp

Given the poor economic conditions, companies are looking for the opportunity to reduce costs and one hot area that is ripe with potential savings is to conduct transportation procurement bids. The process involves sending bid packages (aggregated forecast of shipments) to carriers, they submit their bids (often involving multiple rounds) and then you evaluate the bids and award the business.

There are a number of software solutions in the Transportation Procurement space that will automate and optimize the whole process.  These procurement solutions do not just consider carrier rates but optimize the results considering carrier performance, capacity, seasonal variability, equipment requirements, service level and business rules.  The benefits realized from these solutions include more reliable capacity with fewer rejected shipments, higher on-time delivery performance, drastically reduced procurement time with a substantial cost savings.

This link has an interesting article from Adrian Gonzalez of ARC Advisory that discusses this topic in further detail: http://logisticsviewpoints.com/2009/05/21/transportation-procurement-is-hot-right-now/

Logistics Management has published their 2009 Logistics Technology Roundtable and some key findings are that companies continue to invest in Transportation Management Solutions (TMS) as a way to reduce costs, improve productivity, increase service levels and meet new regulations.  Companies have shown great interest in utlizing Transportation Procurement solutions as a means for lowering their freight costs.  

Since utilizing a TMS has proven to save 5 percent to 25 percent of a companies freight spend depending on how manual their processes are, companies are willing to invest in the technology, even with the poor economic conditions.  Companies that invest now will be able to be leverage their improved efficiencies when fuel prices rise and capacity gets tighter.  Here is the link to the read the full report:  

 http://www.logisticsmgmt.com/article/CA6655601.html